Justice News

Long Island Investment Portfolio Manager Sentenced to 28 Months in Prison for Scheme to Steal More Than $440,000 from Clients

Defendant Created Sham Investment Advising Business

Earlier today, in federal court in Brooklyn, Patrick Morgan Schiro, a resident of Rockville Centre, New York, and the founder of Black Rock Morgan LLC (BRM), was sentenced by United States District Court Judge LeShann DeArcy Hall to 28 months’ imprisonment, with restitution amount to be determined, for orchestrating a wire fraud scheme that defrauded five investors of approximately $440,000. Schiro previously pleaded guilty to wire fraud pursuant to a plea agreement with the government.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, announced the sentence.

According to court filings and facts presented at the plea hearing, Schiro incorporated BRM, a purported investment management business, in February 2014. From approximately July 2014 to October 2015, Schiro used false and misleading statements to induce five individuals to invest approximately $440,000 with BRM, and he concealed his prior federal conviction for securities fraud from at least four of them. For example, Schiro falsely told one investor that BRM had many clients, managed millions of dollars in assets, and had “a team of investment professionals with significant sector-specific expertise.” Once he had the funds, Schiro also deceived his investors by telling them that their investments were performing well. For example, Schiro told one investor that his investment of approximately $242,000 was valued at $711,000.

Contrary to these representations, Schiro invested only a small amount of the funds and used a significant amount of the money for his personal expenses, including approximately $190,000 to pay one of his children’s university tuition. When investors asked for their money back, Schiro often ignored their requests or provided false or misleading excuses. For example, when one investor asked to redeem $250,000 from his account, Schiro caused an email to be sent to that investor stating that the request had been denied because: “Consistent with our AML [anti-money laundering] responsibilities and U.S. patriot act regulations wire transfer withdrawals and redemptions MUST and will ONLY be sent to the bank account associated with your BRM Account.” In fact, no such policies were in place to prevent the transfer requested by the investor.

The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorney David K. Kessler is in charge of the prosecution.